Question

Explain the different types of credit meant for financing foreign trade

Answer 1

There are a number of different types of finance which can facilitate the trading of goods and services both globally and domestically. The trade finance industry also supports and accommodates transactions that facilitates international payments, mitigate currency risk and exposure, and both debt and equity fundraising.

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Answer 2

There are different types of credit meant for financing foreign trade which are through the method of pre-payment, by working capital loans, method of factoring, by forfaiting and also through overdrafts or credit facilities

Explanation:

• The most significant form of financing foreign trading used by by enterprises are by giving credit facilities for suppliers, forfaiting and through credits paid by the buyers. There are other forms of credits available through project financing and leasing
• Trade financing helps the enterprises in committing for foreign trading in the international markets through different techniques of financing. the financing helps the the companies in importing and exporting goods and services across the borders.  
• The capital loans help the enterprises in acquiring raw materials and and these loans are available for short periods. Forfaiting helps in mitigating the risk factor with the suppliers. Overdrafts is another facility that is used by the companies which is much easier to conduct the business.